Lex: Deutsche Bank | FT

The good news in Deutsche Bank's third quarter earnings was meagre enough: some progress on cost reduction, plus an assertion that bad debt provisions might have peaked. This, however, appeared sufficient for hungry investors.

The bad debt claim is dubious. The bank did not feel confident enough to insert the claim in its interim report, confining it to the supporting slides. Anyway, one may doubt Deutsche's forecasting prowess in this field. At the start of 2002 it was steering analysts towards €1bn of bad debt provisions for the full year, but has already recorded €1.61bn for the first nine months. The cost story also remains unconvincing. An earlier €2bn cost-cutting plan is showing through but costs in the investment bank hardly seem to budge. A third of the €4.1bn reduction in the cost base projected on Thursday reflects the sale of businesses - and is, of course, offset by parallel reductions in revenue.

Deutsche Bank can make all the adjustments it pleases: an "underlying" pre-tax profit of €74m in the quarter is still pretty miserable. If you want to own a German financial stock, you have to own Deutsche Bank. Its capital strength - bolstered, to its credit, by the sale of non-core assets - puts it in a different league from Commerzbank, HVB or Allianz. But why would you want to own a German financial stock? more